Sony in talks to team with Apollo to bid for Paramount

In ongoing discussions, Apollo Global Management and Sony Pictures Entertainment are considering teaming up for Apollo’s $26-billion bid for Paramount Global. This partnership aims to bolster the private equity firm’s endeavors to secure the sought-after asset. Although the discussions are in preliminary stages, the two parties have been negotiating the framework of a potential agreement, wherein the Culver City-based Sony film and television studio would assume a leading role in the partnership.

According to sources familiar with the matter, Sony would command a substantial majority stake in Paramount if a deal materializes. However, neither Sony nor Apollo has officially submitted a bid for Paramount yet. Instead, they are observing from the sidelines during an exclusive 30-day negotiation window extended by Paramount’s independent board of directors to entrepreneur David Ellison, the head of Skydance Media, known for producing Hollywood blockbusters like “Top Gun: Maverick.” This negotiation period is set to expire in early May. Ellison, in collaboration with investment firms RedBird Capital and KKR, has proposed acquiring Shari Redstone’s family holding company National Amusements, followed by merging Skydance with Paramount. The execution of this two-step structure, which remains uncertain, has added complexity to the auction process. While Redstone favors the Ellison deal to prevent Paramount from being fragmented, it has faced opposition from Paramount investors who argue that the deal primarily benefits Redstone rather than ordinary shareholders.

Should the Sony-Apollo partnership receive approval from regulators, Tony Vinciquerra, Chief Executive of Sony Pictures Entertainment, would likely oversee the operation. Sony has previously expressed interest in acquiring the Melrose Avenue film studio, albeit facing rejection due to Paramount’s preference to sell the company as a whole. Representatives for Sony and Paramount declined to comment on the ongoing discussions. The news of the talks between Sony and Apollo was first reported by The New York Times.

Earlier this year, Apollo initially proposed acquiring Paramount’s film and TV studio operations for $11 billion, which was later increased to $26 billion to include Paramount’s $15 billion debt. Despite the adjusted offer, the cash component for the entire company remains approximately $11 billion. Apollo’s bid follows similar attempts by other entities, including Skydance, Warner Bros. Discovery, and Allen Media Group, to acquire Paramount. While Warner Bros. Discovery’s interest waned after preliminary discussions, Allen Media Group continues to express interest.

A potential merger between Sony and Apollo may raise regulatory concerns due to its impact on the Hollywood landscape. The combination would involve integrating the Melrose Avenue Paramount Pictures with Sony’s Culver City operations. Additionally, Federal Communications Commission regulations impose restrictions on foreign ownership of broadcast TV stations, necessitating the sale or licensing of the CBS station group currently held by Paramount.

SOURCE: LA Times